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This anecdote illustrates how the market could be seen as a big society-level pump and dump scheme. The guys at the top invest early at a low price, then pump t

This anecdote illustrates how the market could be seen as a big society-level pump and dump scheme. The guys at the top invest early at a low price, then pump the investment downstream as much as possible, then dump when things start looking too much like a bubble (i.e. "the shoeshine boys start giving stock advice"). If enough people at the top dump at the same time, the bubble bursts and there's a crisis. Even if some of the guys at the top couldn't get out in time, they are unlikely to get ruined by playing the game. The guys at the bottom on the other hand, usually end up literally paying the price for their risk-taking.

chrisco255 6y ago
That would be true if the market didn't consistently outperform inflation over the long run. Dollar cost average...buy and hold. Markets are subject to irrational swings in either optimistic or pessimistic directions. Rich people go bankrupt too. For every short there's got to be someone with equal volume going long...and vice versa.
- maest 6y ago
  > That would be true if the market didn't consistently outperform inflation over the long run. It should be pointed out that this is true mostly of the _US_ _stock_ market. Empirically, this isn't true of non-stock markets and isn't true of many non-US markets. Buy-and-hold is a popular advice in the US because of the rather unique bull run over the past few decades in this market.
  - chrisco255 6y ago
    Past few decades? It's been true for over a century. Even if you rode out the Great Depression and held your Dow index. Now, I'm not claiming the current prices aren't a bubble, but bubbles (booms and busts) are normal part of any market.
    - llampx 6y ago
      I saw an inflation-adjusted chart of the S&P 500 that showed we are basically getting back to even after the 2009 crash.
      - chrisco255 6y ago
        It's at all-time highs right now, way over what the stock market was in 2007, 2008. The S&P had already bounced back to pre-2009 levels by 2014. At 3350 right now, it's more than double what it was in 2007 (1500). Inflation has not doubled since 2008. Inflation is near all time lows and interest rates are near all time lows and have been for at least a decade.
BTCOG 6y ago
Well, this is essentially how the markets work, in general. The top wealthiest traders with many connections on Wall Street tend to take the earliest tips to get in early, by the time the rest of the country/world start to play they're ready to dump. With a readily connected internet, it's much simpler to gather market sentiment and always get out after a rise. Money makes money.
ASalazarMX 6y ago
We got to see that in action here at HackerNews a few months ago. Tesla was doing great, then suddenly there was one news article after another about how Elon was dooming Tesla and it was practically crashing, then a couple of months of peace, and Tesla is suddenly awesome again. It looked someone with influence wanted Tesla stock cheaper for a while.

chrisco255 6y ago

That would be true if the market didn't consistently outperform inflation over the long run. Dollar cost average...buy and hold. Markets are subject to irrational swings in either optimistic or pessimistic directions. Rich people go bankrupt too. For every short there's got to be someone with equal volume going long...and vice versa.

maest 6y ago
> That would be true if the market didn't consistently outperform inflation over the long run. It should be pointed out that this is true mostly of the _US_ _stock_ market. Empirically, this isn't true of non-stock markets and isn't true of many non-US markets. Buy-and-hold is a popular advice in the US because of the rather unique bull run over the past few decades in this market.
- chrisco255 6y ago
  Past few decades? It's been true for over a century. Even if you rode out the Great Depression and held your Dow index. Now, I'm not claiming the current prices aren't a bubble, but bubbles (booms and busts) are normal part of any market.
  - llampx 6y ago
    I saw an inflation-adjusted chart of the S&P 500 that showed we are basically getting back to even after the 2009 crash.
    - chrisco255 6y ago
      It's at all-time highs right now, way over what the stock market was in 2007, 2008. The S&P had already bounced back to pre-2009 levels by 2014. At 3350 right now, it's more than double what it was in 2007 (1500). Inflation has not doubled since 2008. Inflation is near all time lows and interest rates are near all time lows and have been for at least a decade.

BTCOG 6y ago

Well, this is essentially how the markets work, in general. The top wealthiest traders with many connections on Wall Street tend to take the earliest tips to get in early, by the time the rest of the country/world start to play they're ready to dump. With a readily connected internet, it's much simpler to gather market sentiment and always get out after a rise. Money makes money.

ASalazarMX 6y ago

We got to see that in action here at HackerNews a few months ago. Tesla was doing great, then suddenly there was one news article after another about how Elon was dooming Tesla and it was practically crashing, then a couple of months of peace, and Tesla is suddenly awesome again. It looked someone with influence wanted Tesla stock cheaper for a while.